How Rising Interest Rates Affect Your Portfolio

If you’ve been paying any attention to the latest financial news, then you probably already know that interest rates are rapidly rising. What you might not realize, however, is that this could have an impact on your investment portfolio.   

There is also a widespread belief that the rising interest rates will create a bear market when it comes to bonds. Whatever may actually happen, these big rate changes can have a major effect on your portfolio, and you need to be properly prepared to handle these changes and still come out on top.

For one thing, make sure you own bonds. You can expect them to suffer somewhat as interest rates rise, but they are not nearly as volatile as stocks. Even when things get rough, bonds should earn you a consistent income and make your portfolio less volatile.

Other than ensuring that you own bonds, you will want to make sure that your portfolio is diversified, which means including some stocks into the mix, even if they are a bit less certain than bonds. If your portfolio is diverse enough, it should be able to make it through unexpected economic times and rising interest rates. Sure, it might suffer a bit here and there, but, ultimately, if it is balanced enough, you should still come out on top.